Fixing Ghana’s Textile Sector, And Morocco’s Example

With a labour force of around 200,000, the textile sector is a key employer in Morocco. While sector performance has stagnated over the past decade, the last year saw an uptick in activity, with exports increasing by 5 per cent in 2014, according to figures released by the Office des Changes, the kingdom’s official statistician.

Ghana similarly had a vibrant textile industry, with over 40 textile firms, which used to employ more than 25,000 people.

Not any more, however. The country now has only four textile factories employing less than 4,000 Ghanaians.

Truth is that the industry, which was once the leader in Ghana’s industrial sector, has consistently been in decline for years due largely to trade liberalization policies and programmes, which are making it impossible for Ghana’s textile products to compete with cheap imports from Asia.

In terms of taxes, revenue from the local industry is shrinking particularly at a time when the government is hard passed for cash to accelerate its development agenda. Meanwhile, the floodgate seems to have been opened to a few to smuggle into the country what can be produce here to meet the demands of the market.

The Textiles, Garments and Leather Employees Union (TEGLEU) of the Ghana Federation of Labour has warned of massive job losses within the local Textile industry if government fails to check the incessant smuggling of pirated textile products into the country. China has gradually taken over Ghanaian market with a primary focus on the Textiles industry where the growth of it’s exports constitute a double agony for the country.

For instance, Akosombo Textiles Limited (ATL), one of the leading fabric companies in the country is on the verge of collapse as a result of cheap imports from china and other countries.

Apart from Akosombo Textile Limited, other companies such as Ghana Textile Print (GTP) and Printex have all shut down their spinning and weaving departments due to cheap inports from china. These sections employed a chunk of the labour in the industry. However, the companies could no longer afford to accommodate these numbers and pay over 30times the amount of cheap imports from china.

Textiles that come from china do not only carry the designs of Ghanaian cloths, but are imitated to let them appear as if they were produced in Ghana. Although the Chinese textiles are not durable, compared to made-in–Ghana ones, they sell far below Ghanaian textiles.

Consequently, most retailers of local textile companies such as ATL, Printex, and Ghana Textiles Prints (GTP) are said to have abandoned the local cloth and are now selling wax prints from china, which is far cheaper. Due to the hardships, the companies have all resorted to the importation of gray baft and semi –finished cloth for printing in the country.

Though stakeholders in the country have made frantic efforts to revitalize the textile and garment industry, this seems to have hit the rocks since the economy is recording a rapid surge in the sale of fake logos and designs of Chinese textile firms on the market. Industry watchers are thinking about the fate of tertiary graduates who pursue Industrial Art programmes with textile option on the labour market as the sector faces imminent collapse.

Ironically, while Ghana’s textile industry is collapsing, Morocco’s is on the rebound.

The rise of fast fashion and just-in-time supply chains has played to the advantage of the Moroccan industry. From 2012, China and India began focusing attention to producing for their own local markets, moving away from their former export-oriented stance. The subsequent gap in the market has benefitted Moroccan exporters. According to Eurostat figures, the kingdom’s textile exports to the US increased by 26 per cent in 2014, while those to the European market rose by 10 per cent in that year.

Morocco has also fared rather well compared to some of its competitors, with Turkish, Chinese and Tunisian exports rising 5 per cent, 4 per cent and 3 per cent, respectively.

But how did the kingdom achieve the feat?
And, what lessons can Ghana learn from its old friend?

Morocco’s secret lies in its launch a couple of years ago of the Industrial Acceleration Plan (Plan d’Accélération Industrielle, PAI) which has started injecting new life into the industry. The textiles sector, along with the automobile industry and offshoring, was one of the first sectors to be incorporated into the new development plan, given its strong potential to generate value-added production, attract investment, stimulate exports and create new jobs. Six sub-segments were identified to be developed into productive ecosystems, and these include fast fashion, denim, technical textiles, home and lifestyle use textiles, knitwear and distribution.

The sector is forecast to create 20 per cent of the 500,000 jobs promised under the PAI.

To that end AMITH, the Association Marocaine des Industries du Textile et de l’Habillement, or the Moroccan Textile and Apparel Manufacturers Association, put forth a 10-year textile development programme that will run through 2025, with the aim of tripling current export revenues to €9.79bn. The programme will be rolled out in two stages, with a start-up phase running through 2020, followed by an acceleration phase that will run for a further five years. In its first phase, the plan will seek to rebuild the industry’s fundamentals and tackle the obstacles that have hampered the sector’s development. Limited in-country access to raw materials, for instance, has impeded manufacturers, particularly those operating in the fast-fashion segment.

Morocco is home to 1600 textile manufacturers, including major players such as Spanish firm Inditex, which includes the Zara and Bershka brands, for example. However, production has not often been directed to the domestic market for several reasons, key among which is the scope of the informal sector. Recent efforts to identify these constraints and assess the market’s potential have revealed that business locally is not only as important as the export business, but holds even higher potential, according to documents from AMITH.

With the domestic market valued at around €4.35bn in 2012 – as opposed to the €3.26bn actually generated through exports – various changes, including evolving consumption habits, improved purchasing powers and the expansion of the middle class, thus bode well for the future development of the local textile industry in Morocco.

Morocco did something else. It also halted the downward trend in the appreciation of their famed traditional hand-woven textile.

From a period when the viability of hand woven textiles in Morocco came under threat due to more Moroccans adopting Western clothing and irresponsible tourism created a trend to lower the prices of hand-woven traditional Moroccan textile, there has now returned a revival of interest towards traditional techniques; and a new generation of young artists and designers has become fascinated by these, and are using them for their creations.

Ghana needs to borrow a leaf here from Morocco.
While the government’s Friday-wear policy is good, more proactive measure, however, need to be adopted urgently to reverse the textile industry’s total collapse.

Strengthening agencies such as the Customs Excise and Preventive Service (CEPS) to intensify border patrols and tightening port operations to ensure that cheap imports do not slip, among others, are all good.

But for the long haul, now is time for Ghana to adopt a Morocco-like sector-specific industrial acceleration plan for a sustainable local textile industry super-structure.